Funding is sought for a two-year longitudinal follow-up study and continued data analysis to test a theory about the nature of children's peer interaction employing variables that involve emotion and psychophysiology within the family context. This study also sought to identify the linkages between marital conflict, parent-child interaction, children's peer interaction and child behavior problems in young boys and girls. Sixty families with 4- 5 year old children and who varied in marital satisfaction participated in a 1985-86 study of marital, parent-child and peer interaction. The initial focus of the research was on friendship formation and emotional development in children. This focus was maintained in the research conducted during the previous project period, with the added expansion of employing naturalistic interaction within the family context as well as within the child peer system. A central construct of the research is the notion of emotional regulation. This study utilized a multimethod measurement strategy to create a data base of synchronized video and autonimic data. The proposed investigation will conduct a two- to three-year followup on these families, and a variety of child outcomes will be assessed, including social (peer interaction), cognitive and behavioral parent and teacher rations. Continued coding and analysis of the 1986 observational and physiological data will also be conducted, and these variables will be used to predict the child's social competence and academic achievement at follow-up. The proposed research is based on a theory referred to as social DPA theory, which proposes a physiological basis (Diffuse Physiological Arousal, DPA) for the transfer of marital discord to the child. It is proposed that the ability to regulate emotion at age 4-5 will be associated with door social competence and other child outcomes at follow-up.